Teaching German

News

Brazil sells rights to offshore oil fields for €1.6 billion

Brazil has traditionally protected its national oil champion, Petrobras, from international competition. But that has changed with embattled President Michel Temer trying to lure in foreign investment.

Brazil sold the rights to develop six deepwater, pre-salt oilfields on Friday for 6.15 billion reais ($1.9 billion, €1.6 billion) after a court order on Thursday had almost prevented the highly anticipated auction from taking place.

The government had aimed to rake in 7.15 billion reais from the sale, but two of the eight auctioned blocks failed to sell.

Sixteen companies took part in the auction for eight offshore, pre-salt oil blocks

Sixteen oil companies in total had registered for the auction.

Decio Oddone, director general of Brazil's National Petroleum Agency, told reporters after the auction that the results "far exceeded our expectations."

Fighting a court injunction

The sale started two hours later than planned due to a court injunction late Thursday.

Judge Ricardo Augusto de Sales suspended the auction after Brazil's left-wing Workers' Party and the country's biggest trade union complained that the government was selling off Brazil's wealth.

"Fighting against the handing over of pre-salt (reserves) is fighting for the creation of jobs and revenue in Brazil," said Carlos Zarattini, a senior Workers' Party lawmaker.

But Brazil's solicitor general said on Friday that the government had won an appeal against the injunction, paving the way for the auction to take place.

Why Brazil is striking

Temer's reform bill

Brazilian unions called Brazil's first nationwide strike in 21 years against a tough austerity and reform bill put forward by President Michel Temer. The bill aims to reduce labor costs and erode the power of unions. Temer said he hopes it will kickstart an economy battered by a recession. Workers' Groups think the reforms go too far and question the government's legitimacy.

Why Brazil is striking

14 million unemployed

Battered by a recession, unemployment in Brazil has increased steadily over the past two years. In the first quarter of 2017, unemployment hit 13.7 percent, totaling more than 14 million people. Brazil's economy is expected to grow fractionally again this year, although that largely depends on whether Temer can advance his reform package.

Why Brazil is striking

Confounding levels of graft

Brazil's recession has dovetailed with a far-reaching corruption probe that has engulfed the country's political class. Former leftist President Dilma Rousseff (pictured) was impeached and removed from office for breaking budget rules. However, around a third of Temer's cabinet has also been implicated in what is an ever-widening investigation.

Why Brazil is striking

General strike brings Brazil to a standstill

Union leaders said they expected Friday's strike to be the biggest in Brazil's history. Public transport networks across major cities were shut down. A number of other public bodies were also affected, including libraries, schools and even some hospitals.

Why Brazil is striking

A growing risk of violence

Some protesters at Friday's demonstrations set up barricades and lit tires ablaze. Police responded with tear gas. Sao Paulo, Brazil's most populous city and financial powerhouse, was the worst affected.

A change of heart

The auction was the first time Brazil has allowed foreign oil companies to buy the right to operate in national oil fields independent of Petrobras.

Governments had previously required the state-owned giant to have a 30 percent stake in oil ventures.

Share

Brazil’s faltering economy

Brazil’s faltering economy

The National Petroleum Agency has estimated that the government could receive $130 billion in royalties if all eight blocks were developed.

The Brazilian state also stands to make a lot of money from operating profits. Many of the successful bidders agreed to high profit shares for the government.

But some left-wing critics refused to back down after the sale. Former President Dilma Rousseff, who was removed from office in 2016, lashed out against the auction, saying: "Brazil is handing oil over to foreigners for the price of bananas."